I'm going to discuss the Theater High Altitude Air Defense system program with you today.

As most of you are aware, the Army has recently conducted two successful intercepts of the THAAD system, a system which I remind you is absolutely critical to defeating the evolving ballistic missile threat. I want to talk about those two intercepts before I go into the other part of this briefing.

The first intercept occurred in June of '99. It was an endoatmospheric shot which is generally less than 50 miles above the earth. This shot was to take out a unitary target. A unitary target is one in which the RV does not separate from the booster.

In this case the system has to correctly identify where the warhead is on that configuration, and the missile has to hit the warhead in what I will call the sweet spot.

The second shot we'd like to show you, for those of you who have not seen this, is Flight Test 11 which occurred earlier this month. If I could have the video?

(Video shown)

Flight Test 11 was an exoatmospheric shot. That's above 50 miles above the earth. In this case the shot was to look at a separating target -- a target which has the booster that separates from the RV.

The THAAD system must correctly identify the booster and the RV, and the missile must take out the RV, again in the sweet spot.

This shows the Hera target launch. Again, in this shot it's an exoatmospheric shot which means it's above 50 miles above the earth.

This shows a picture of the THAAD missile launch.

The THAAD performs something we call TEMS which is the THAAD Energy Management System. That's the maneuver that you see now. It is intended to bleed off energy for range safety constraints and also for close-in targets.

This is another shot of the same launch.

The radar must hand off to the missile the location of the RV and the booster so that when the booster seeker opens its eyes, it actually sees what you're looking at right now. This is from a radar or from an optical system on the ground that shows the RV on the top, the second stage on the left, and the THAAD in the middle. The THAAD correctly identified--the system correctly identified the RV and then destroyed it.

You can turn that off now.

If we can bring the chart up?

What I'm trying to point out to you is we've had two very successful THAAD intercepts.

I would also like to point out, and I'll show on this chart, that we've had a total of 11 shots on THAAD. If you look at this chart which is available to you in your packages, Flight Tests 1 through 11 on the top, and also what the subsystems are of the THAAD system. We have the radar, the launcher, the battlefield management command and control, communications and information, and the missile.

In each of these shots what I'd like to point out is as we've evolved over these flight tests, is that in every shot the radar performs nominally. The launcher performed nominally. The battle management command, control, communications and information system performed nominally.

We had hardware issues with the missiles up until Flight Test 10. When those hardware issues were solved, Flight Test 10 and Flight test 11 performed nominally.

Q: What do you mean by nominally?

General Franklin: They were able to intercept the target in what I will call the sweet spot. Let me kind of describe that to you in unclassified terms.

If you think of a reentry vehicle as a target about 13 feet tall, which is roughly the distance from the ground to the ceiling, the sweet spot on where you want to hit that warhead, since this is hit to kill, is roughly the size of a basketball. In both cases, in Flight Test 10 and Flight Test 11, we hit within that region.

Last year prior to these successes, we stated that we had confidence in the basic design of the missile but that the failures were attributed to poor missile quality. The contractor put considerable talent and effort into testing of these missiles and their efforts have been proven successful by these recent tests.

We had stated that the THAAD must have three successful intercepts before we would authorize the program into going into engineering, manufacturing and development. Over the last month, we have reviewed that criteria.

The contractor, through extraordinary efforts, has proven that it can make the design work, and these latest tests have proven that and they have proven that emphatically. But this has been at a cost.

The contractor has focused on making this older hardware work instead of focusing on the ultimate goal of the engineering development of the ultimate system.

We have confidence in the technical design. Rather than spending millions of dollars and months on another prototype intercept, we have decided to focus on the future system and the engineering development of that future system. Therefore, we have directed the Army to cancel the remaining project definition risk reduction flights or PDRR flights, and prepare for engineering, manufacturing and development.

I will point out that this is not a decision to go into EMD. That decision will only be made when all statutory requirements and regulations are met by the program. We will be working closely with Congress as we work towards EMD.

We believe this allows us to focus on the future and also recognizes this evolving ballistic threat.

What are your questions?

Q: Why not go ahead with the third test and prove without a doubt that it's worked? Certainly the fact that you had seven successive launch failures, you've had two successful tests now. Why not go ahead with the third successful tests that will resolve questions about this instead of having people charge that perhaps you don't want to take a chance on another unsuccessful test?

General Franklin: I think that's a good question.

First of all, we understand the technical design--as we have said earlier--we believe the technical design was valid. We think we have proven that through Flight Test 10 and 11.

But I go back to my earlier comment that what we have done is we've got the engineering talent of Lockheed Martin, the contractor, focused on this prototype hardware when where we want to focus them on is designing the hardware that we're actually going to end up buying. So it's a matter of focusing and not delaying that focus.

Q: You said this does not mean you're entering the engineering, manufacturing and development phase. I don't understand the difference. It says here the Army is authorized to move into the EMD phase. It sounds contradictory.

General Franklin: To enter EMD phase we need to go through what we call a Milestone 2 Decision. To enter that Milestone 2 Decision we must have certain statutory requirements. An example being an independent cost estimate. There are certain DoD regulations that we must achieve. We have not achieved those yet so we are in a phase now preparing for that EMD decision.

Q: What does moving into the phase [mean], why is that not entering the phase?

General Franklin: Because we are not going actually into EMD, but we are preparing for EMD at this time.

Q: What will the next test look like? When will it come? Will it be similar to this?

General Franklin: What we are focusing on now is to look at the test program, along with the contractor. We've got the total team looking at that.

The next test, and we'll have many of those, in engineering, manufacturing and development, more than 30 -- 35 to 40 tests. What we're focusing on, though, in engineering, manufacturing and development is to not only look at a more robust test program, but also to focus on simulations and hardware in the loop simulations. The tests that will occur during engineering, manufacturing and development will take into account tests like what were envisioned for Flight Test 12, but many other tests also. So I can't tell you exactly what that flight test will look like, but I will tell you that it will encompass tests that we've done already and other tests.

What we're going to do, though, is test the actual equipment that we plan on buying, not this prototype hardware.

Q: Do you have any idea when that round of tests might start?

General Franklin: I do not. We are going through that right now.

Q: Has the Operational Test Office bought off on this? And can you tell us exactly how much time and how much money you intend to save by doing this?

General Franklin: First of all, a test roughly costs about $15 million. The operational test community, this is a decision by Department of Defense and reflects Department of Defense consensus.

Q: Does that mean the Operational Test Office has okay'd it, or did they express an opinion at all?

General Franklin: This is a consensus. What we need to do is we need to make the tests in engineering, manufacturing and development robust enough to handle any issues we have with the operational testing community.

Q: Yes or no. Has the Operational Test Office issued an opinion on this? And was that opinion yeah, sure, go for it?

General Franklin: I would just say that this is a consensus among Department of Defense.

Q: Including the Defense Secretary?

General Franklin: Yes.

Q: What was the thinking last year when you raised the bar from two to three successful tests?

General Franklin: I think you have to remember that last year at this point we had no successes. We had looked at wanting to make sure that we understood the technical design to reduce the risk actually to enter into EMD.

But what we've been able to demonstrate twice in a row now, that not only do we understand the technical design, but that when the system works and all components of that system work, that we are able to actually hit the target exactly where we want to. Based on that, and based on the review of those tests, we believe now that we are ready to enter into the next phase.

Q: A couple of quick questions. One is, do you have an estimate as to how much this could accelerate the eventual fielding of THAAD?

Secondly, how much is Lockheed set to get in an EMD contract?

Thirdly, is part of this just sort of realization on the part of the Department that development of missile defenses are somewhat behind the curve of this evolving threat? Is that part of this as well? Sort of taking a chance, if you will, to make sure that something's out there to deal with North Korean missiles and what have you.

General Franklin: Let me take your last question first.

What this recognizes is we're developing a THAAD program and all of our ballistic missile programs have recognized an evolving threat. But at the same time, we're going to build in the correct tests and the proper risk into these programs. So we recognize there's a threat there, but at the same time we are actually building the program to accommodate the right amount of risk and the right amount of engineering development.

Your second question on the amount of the EMD contract, I don't have those figures. Rich, do you have those numbers? I can get those for you. I do not have those numbers.

Your first question was?

Q: How much could that possibly be...

General Franklin: We are currently assessing that. In fact the contractor and our government team are currently assessing what can be done now.

Q: On EMD, the GAO has estimated about $4.5 billion, rough order of magnitude. Is that...

General Franklin: I don't want to (inaudible) rough order of magnitude.

Q: A quick followup. Lockheed was docked $15 million earlier this year for the sixth successive failure. Will they now get a chance... Will that be refunded to them since they don't have a chance to hit the three in the agreement?

General Franklin: I think that's a fair question. First of all, I'd just like to remind you that this whole program's goal is to meet an existing threat, and it is the contractor/government team that is meeting that goal.

The second thing is that Lockheed Martin, the contractor, has done a very good job putting the right amount of talent and putting a lot of the management oversight into making these successes that I've shown you today.

We are currently negotiating with Lockheed Martin over that cure notice. We will do what meets the needs of the government and at the same time be fair to the contractor. But we are in the process now of talking with Lockheed Martin.

Q: What's the discussion? They were supposed to hit three, you cut off the third one. It seems an equity issue, just give them the money back...

General Franklin: The discussion is to be fair to the contractor, but at the same time meet the needs of the government.

Q: On the question about operational test and evaluation, Mr. Coyle was asked this by a couple of news organizations and he came back with a response for the record saying he opposed or was skeptical about moving into EMD. Are you aware of that? He coordinated it with your office, I thought.

General Franklin: I'm not aware of that, and I guess you would have to address that to Mr. Coyle.

Q: If everything goes as you would like to see it happen here, moving into EMD, what's the earliest that the testing can start again? And would they be a mixture of high endo and exo tests? Or just high endo or exo or...

General Franklin: I believe the tests will start in about 2002, 2003 -- by the way, that's Brigadier General Richard Davis. He's the head of my Directorate for Air and Missile Defense.

Q: You're talking about the 30 to 40 tests...

General Franklin: Yes.

Q:...we asked about earlier and you said it could be...

General Franklin: It could be in that timeframe, but remember what I told you also, that we are evaluating those tests now.

Q: Is that the earliest? 2002, 2003?

General Franklin: Yes.

Q: So no tests at all until then?

General Franklin: Well, there are many tests leading up to that. Hardware in the loop. No flight tests.

Q: No flight tests. Okay. And would they be exo and high endo or...

General Franklin: Both.

Q: First a contractual question, then one about the defense issue.

You gave Lockheed a certain amount of money to do X amount of work under PDRR. Basically the converse of the $15 million. Now they're not doing a certain amount of work in PDRR. Would you have a claim to get money back from them since you guys awarded them a contract?

General Franklin: Again, that is part of what we're discussing with Lockheed Martin now. Since we canceled Flight Test 12, we are discussing those issues with Lockheed Martin.

Q:...the $15 million as well as PDRR money you might have already given them for work that they're now not performing.

General Franklin: We are discussing all issues.

Q: The other question I have, can you elaborate on this... You're looking at the EMD schedule. What are you looking at exactly?

General Franklin: We are looking at the EMD schedule in light of the necessary tests that are required; the necessary hardware in the loop simulations; the necessary simulations; making sure that the risk in that program is the right amount of risk; and also addressing how we can make sure that we're meeting the evolving threat.

Q: It sounds on the one hand that you're looking to add testing because you didn't do certain things here and you want to make sure you have a robust system. On the other hand you say well, there's a threat, so it sounds like you're trying to compress the schedule. What is it exactly that you are trying to get at?

General Franklin: We are trying to create a program that has a reasonable amount of risk in it, a reasonable amount of testing, hardware in the loop simulations, simulations, and keeping in mind that we're addressing a real threat as we evolve.

Q: When do you think a decision... Would it be fair to say that you've made a tentative decision to go into EMD, but the final decision has not been made?

General Franklin: The final decision will not be made until we bring that before the Department of Defense to review EMD decisions.

Q: You've made a tentative decision.

General Franklin: We've made a decision to go to the next stage which is preparation for engineering, manufacturing and development.

Q: When do you think a decision would be made...

General Franklin: We're probably looking at next year sometime.

Q: Can I ask also, what happened with the Hera missile this morning, the PAC-3...

General Franklin: For those of you who don't know, we had a PAC-3 delay this morning. The PAC-3 missile itself was fine up to the point where the Hera target ran through its own self-checks, and about 30 seconds before launch it shut itself down. We don't know exactly why that happened and we're reviewing that and we probably won't know exactly what happened to the Hera target until Tuesday.

Q: You don't know when a new test might...

General Franklin: We'll know that probably on Tuesday.

Q: Thank you.

Q: Are you considering a Bloc upgrade program for the THAAD missile EMD? Are you trying to have like a Bloc 1 missile so you can get some kind of capability out as soon as possible, then go to a Block 2, that type of thing?

General Franklin: We are currently assessing the program with the program manager and the contractor to meet those guidelines of what we're looking at for robust testing and low risk. So we're looking at options, at all options right now with the program manager.

Q: There's a bill introduced by Congressman Vetter and Weldon that said that, if it becomes law, it would state that the THAAD system would have to go against target missiles with characteristics of a Taipo Dong 1 by the end of fiscal year '01. Is that a realistic goal for the THAAD system, or would that be stressing the test program too much?

General Franklin: I'm not going to comment on that bill that's being pushed forward. We will develop the THAAD system at what we think is a reasonable rate to meet reasonable test requirements that we have to go through.

Q: On the THAAD radar, there have been reports of a discussion in the building here about sending that to Japan to monitor the North Korean tests. What do you think about that?

General Franklin: I'm aware of the issue. It is an issue that Ken Bacon addressed I believe on Tuesday, and I really don't have anything to add to his comments that he's made on that.

Q: What's now going to happen with the upper-tier strategy if you're moving out on THAAD?

General Franklin: You have to remember that the THAAD shot was good for everybody in the upper tier strategy. Look at the hit-to-kill technology in the exoatmosphere. The Navy Theater-Wide System must also hit to kill in the exoatmosphere. The systems, the programs actually worked quite well together. During the last Flight Test 11, as a matter of fact, there was a surrogate seeker of the Navy Theater-Wide flown on our airborne surveillance tracking system that was actually looking at the targets.

I think what you need to focus on is that both of these systems help each other out and that both of them are critical to meeting the future threat. Our desire is to bring both systems in as soon as we can, recognizing the proper programmatics for those systems at the lower risk that we can do that meets those needs.

Q: But you have a pot of money for one.

General Franklin: We do. We will address that continuously as we go through the budget. We are fiscally constrained.

This decision to take the THAAD and put it into a pre-EMD phase does not really play in that upper tier strategy as we go. Really, we're going to assess each program as we go through.

Q: There was an article in Aviation Week recently that said that in Flight Test 11 the speed of the THAAD interceptor was about 2.5 kilometers per second, whereas it's required to go about 6.5 to 7 kilometers per second. Is that roughly about right? And if it is, what does that say about the operational realism of that test?

General Franklin: The THAAD system is not designed to go that fast. I would just say that the actual speed that we use in the PDRR missile is classified, but...

Q: In the ball park?

General Davis: (inaudible)

Q: In the ball park for how fast it's supposed to go?

General Davis: It's supposed to go (inaudible). It was never supposed to go six kilometers per second.

Q: But did you consider Flight Test 11 and Flight Test 10 to be operationally realistic?

General Franklin: Clearly the target vehicles followed a certain trajectory that we wanted to look at to be able to determine how the seekers performed. So they were replicas of threat targets that we think we would see.

Q: Just a quick followup to an earlier question. I forget the exact terminology, but there were plans for these early operational capability missiles.

General Franklin: Right.

Q: How was that affected by this?

General Franklin: We had at one time, as you'll remember, a UOES system that looked at bringing the capability to the field earlier. What we are looking at, again, is discussions with the program manager and the contractor to determine the best path forward on the program as a whole.

Q: Why can't you tell us what that actually... What are the balls that are in the air?

General Franklin: I can't discuss those right now because we are in discussions.

Q: Can you give us a ball park figure as to how much sooner this thing could be out there?

General Franklin: No.

Q: Is it months or is it years...

General Franklin: Not at this time.

Q: With the seeker performance during the tests, did you do anything to help the seeker in the last two tests to identify the target? Or is it all working on its own? Is there any cooling or any kind of tweaking, anything like that done?

General Franklin: Actually it's a system that looks for the target. The radar does the initial looking for the target and determines when the seeker opens its eyes up what it's looking at. The seeker, though, must pick out the target and that is a threat replica target and the heat is about what we think is the right amount for that threat replica target for the seeker. But the seeker itself has to be able to pick out those targets.

Q: But you don't do anything to it in a test environment to, I would say, help...